Tactical Error: Health Care vs Finance Regulatory Reform
I believe the brain trust behind the Obama White House has made a huge tactical error.
As Rahm Emmanuel likes to say, one should “never waste a crisis” — and the White House has done just that.
There was a narrow window to effect a full regulatory reform of Wall Street, the Banking Industry and other causes of the collapse. Instead, the White House tacked in a different direction, pursuing health care reform.
This was an enormous miscalculation.
I’m not sure who to blame, but the leading suspects (in order) are Larry Summers, Rahm Emmanuel, Tim Geithner, and (perhaps) David Axelrod. Instead of a populist clean up of The Street (ala Eliot Spitzer circa 2,000), Obama advisors allowed a smoldering resentment to take hold and build amongst the electorate. The massive taxpayer wealth transfer to inept, corrupt, incompetent bankers has created huge resentment amongst the populace — regardless of political affiliation.
There was widespread popular support for a full reform of finance. What the White House should have pursued was: 1) Reinstatement of Glass Steagall; 2) Repeal the Commodity Futures Modernization Act; 3) Overturning SEC Bear Stearn exemption allowing 5 biggest firms to leverage up far beyond 12 to one; 4) Regulating the non bank sub-prime lenders; 5) Continuing high risk trades to be compensated regardless of profitibility; 6) Mandating (and enforcing) lending standards, etc.
All of this could have been accomplished in the first 6 months of the Obama administration. The consumer protection stuff could have been tossed in as well, though it was not the cause of the collapse.
What we got instead, was the usual lobbying efforts by the finance industry. They own Congress, lock stock and barrel, and they throttled Financial Reform. It did not help that the Obama economic team is filled with defenders of the Status Quo — primarily Summers, but it appears Geithner also — the dynamic duo that fiddled while the economy burned.
Such dithering can be fatal to an administration.
This was a colossal blunder. Passing reform legislation successfully would have fulfilled the campaign promise of “Change;” it would have created legislative momentum. It could have provided a healthy outlet for the Tea Party anger and the raucous Town Hall meetings. It might have even led to a “throw the Bums out” attitude in the mid-term elections, forcing the most radical de-regulators from office.
Also wasted: The enormous anti-Bush attitude throughout the country that swept team Obama into office. He should have been “Hooverized,” and O should have tapped into that same wave to force the greatest set of Wall Street and Banking regulatory reforms seen since the 1930s.
Instead, we have a White House that appears adrift, and the most importantly, may very well have missed the best chance to clean up Wall Street in five generations.
Never waste a crisis, indeed . . .
>
See also:
Finance Overhaul Falters as ‘08 Shock Fades
DAVID ENRICH and DAMIAN PALETTA
WSJ, September 9, 2009
http://online.wsj.com/article/SB125245417031494185.html
Financial reforms stalled as Congress returns
Kevin Drawbaugh
Reuters, Sep 8, 2009 7:46am
http://www.reuters.com/article/reutersEdge/idUSTRE5872CZ20090908
US financial regulatory reform remains work in progress
Marc Jourdier
AFP, September 7, 2009
http://www.google.com/hostednews/afp/article/ALeqM5giNLvsTBJX2zMhFt-Uob8gz_-_eg
Most Asia economies reform amid crisis-World Bank
Thomson Reuters 09.08.09, 09:24 PM EDT
http://www.forbes.com/feeds/afx/2009/09/08/afx6861116.html
September 9th, 2009 at 7:15 am
I know this has political overtones —
Please be civil
September 9th, 2009 at 7:28 am
[...] Did the POTUS make a huge tactical mistake by pushing for health care reform with much-needed financial reform incomplete? (TBP) [...]
September 9th, 2009 at 7:31 am
Of course, but Wall St wouldn’t like that so then who would finance the Dems’ elections?
September 9th, 2009 at 7:38 am
You are entirely on target with your comments.
How can one not conclude that their is massive collusion between the banking system and the government when absolutely nothing has been done about this?
The Obama Administration is rapidly alienating a very large sector of the population – the middle class.
This geyser is super heating below the surface. It only needs a catalyst to blow.
September 9th, 2009 at 7:46 am
Sad but true. We”ll have to see how it works out…can’t entirely judge by headlines and polls however.
What is clear is that, on the whole, the Finance Industry is not capable of self-regulation and requires adult supervision. The analogy would be helmet laws, which are indeed public interference in private choice. BUT we pass and enforce helmet laws because private citizens don’t act responsibly but are unwilling to pay for the total public costs, e.g. all those mops, buckets, road repairs, medical bills and other lives lost. Now if motorcyclists wanted to ride helmetless and were required to post a performance bond or buy insurance that covered the total cost then I’d say let them go ahead.
The really funny thing is that the Industry destroyed almost the last ten years of accumulated profits thru their own malfeasant behaviors; i.e. it would be in the interest of the employees, the firms, the investors and society to ensure better governance. The only people who appear to have benefited are the folks who managed to rack off the bubble profits as private compensation and cost the rest of us $Ts.
September 9th, 2009 at 7:46 am
Not sure I agree.
If they had let the financials fail and nationalize what is left over, I gather that even more people would have been pushed from private healthcare to the public system as insurance companies and everything else in the economy would have collapsed. The public health care system would not have been ready for all these people coming on at once and you would have had millions without health care services. I can just imagine the logistics and orthe PR nightmare.
Once the health care situation is “fixed”, then they can deal with the financials. Anyway by that time, crisis number 2 is surely going to be twisting the government’s arm.
September 9th, 2009 at 7:49 am
http://www.cbsnews.com/stories/2009/09/09/politics/main5296058.shtml
CBS/AP) American families would be fined up to $3,800 for failing to buy health insurance under a plan that circulated in Congress on Tuesday as divisions among Democrats undercut President Obama’s effort to regain traction on his health care overhaul.
Well, speaking of tactical errors. I agree with the theme of your post, Barry, and now the health care debate has taken a malignant turn. Consider:
Will there be an income level to save the working poor from the 3800?
Will the uninsurable be spared?
Will the 3800 be used to provide health care at a subsistance level for those fined, or merely spent to pay government bills?
Will the amount fined go up every year, like a COLA?
Will this be a way to force people to pay for the “public” option?
…just wondering…
September 9th, 2009 at 7:50 am
Barry: You assume this was error, not strategy. There is neither political will nor ability to reform our financial system. Distracting the populace is the surest course to assuring continuance of the system that provides milk and honey – regardless of whether it be extracted via 401k, pension plans, excessive consumer debt, when needed, direct taxation.
Also, don’t forget, health care “reform is an honestly difficult political issue. There are many that believe the current system is perfectly developed to continue to extract value from the masses at am optimal rate, while others believe that there is room for improving extractive value by adding additional direct tax subsidies now. Don’t expect true healthcare “reform” until it becomes clear that increasing margins for the industry will require additional tax subsidies. On that day, we will surely see bipartisan reform.
September 9th, 2009 at 7:55 am
for all the “Si, se puede!”-cover, this–as the post, well, lays-out, was too easy to see coming..
one, only, had to understand who, really, where 44’s largest campaign contributors (WallSt./FinServ)..
those contribs are, even, paying mighty div.s in “Health Care reform”, as well.
It is, almost, too bad that the ‘Cained Peep aren’t as stupid as widely thought, for, this equation, 44=43, and then some, is one where Someone’s Ox is fixin’ to get gored.
~
Being American is a political distinction. As such, the documents that articulate what it means to be an American, our values and laws, are primarily the Declaration of Independence and the US Constitution.
Being a proud American means LIVING their values and laws. George Washington admonished Americans to defend our values and law from “the impostures of pretended patriotism.” Abraham Lincoln, considered as one of the world’s most eloquent and powerful writers urged Americans:
“Let every American pledge his life, his property, and his sacred honor;–let every man remember that to violate the law, is to trample on the blood of his father, and to tear the character of his own, and his children’s liberty. Let reverence for the laws, be breathed by every American mother, to the lisping babe, that prattles on her lap–let it be taught in schools, in seminaries, and in colleges; let it be written in Primers, spelling books, and in Almanacs;–let it be preached from the pulpit, proclaimed in legislative halls, and enforced in courts of justice. And, in short, let it become the political religion of the nation; and let the old and the young, the rich and the poor, the grave and the gay, of all sexes and tongues, and colors and conditions, sacrifice unceasingly upon its altars.”
http://www.examiner.com/x-18425-LA-County-Nonpartisan-Examiner~y2009m9d8-Core-American-values-in-the-Declaration-of-Independence
September 9th, 2009 at 7:57 am
Only in a crisis can you see who has the real power and influence.
September 9th, 2009 at 8:02 am
It would be nice to be able to do both, regardless of order. A much needed reform to health insurance provision (we aren’t so much talking about “health care” as “health insurance”) is a much more contentious issue. Getting it done early in the election cycle is vital to garnering support (or at least that is the CW).
I would like to see all of the steps you outlined implemented and banks turned into sleepy utilities that provide money to real businesses, but that pales in importance to health insurance reform. Vigorous enforcement of laws on the books would probably make a big difference. I’m sure anti-trust and RICO could be used to good effect on Wall Street. Let’s start with something like the Pecora commission, get a meaningful health insurance reform through and get back to finance when that report is in.
September 9th, 2009 at 8:05 am
Anyway, all the measures you want reinstated will only get done when everything has collapsed. As long as the knife is still falling, no one will change the rules. And the knife still has a long way to fall.
September 9th, 2009 at 8:06 am
Barry,
I think there has been a failure to regulate financials, since this will effectively stop the music, and everyone will head for the exits with regard to the stock market, and more importantly US bond markets. If financial regulation were to occur, it appears fairly certain that the Fed would be audited. This audit would produce shocking revelations, i.e. the Fed is lending money to Middle Eastern state owned banks via the window to their US token branches for Non US collateral (bonds issued by Middle Eastern borrowers). It is shockingly easy to call up the Federal Reserve in NY and just ask for money if you have even a branch. The banks in questions simply called up and were able to secure $300 mm financing without the Fed batting an eye and saying sure as long as they have ISINs and CUSIPs. If the standards at the Fed are so poor for granting loans I can’t imagine what type of innovative repos are ocurring with the larger US banking institutions. To add insult to injury these firms are posting huge “accounting” profits and paying themselves ridiculous bonuses. In summary, financial reform won’t occur because too many people will be implicated and a failure of confidence in the US economic system would occur..
September 9th, 2009 at 8:09 am
Couldn’t agree more. Obama could have done so much in regards to “financial cleanup” if he chose to do so. People like me who are ideologically opposed to him would have no hesitation in supporting meaningful wall street clean up. But he blew up big time. This is like Bush going to Iraq after 911. Obama is toast; Wall Street is burning and this guy talks about health care and cap and trade. Priorities, my friend! Never seen this bunch of incompetent boobs in my life.
September 9th, 2009 at 8:10 am
Barry, this post is the reason why I read your stuff, every now and then a 3 run homer, lol. Agree 100% major tactical error. Best guess is in there strategy sessions the conclusion was, “well we all know we need WS regulations, yet, right now with growing unemployment, remember feb had 700k, we feel it is too much pressure on a strained situation, we will get too it, let’s focus on some campaign promises”. Back when they were strategizing the stress tests had not even been completed, they wanted the dems in the house and senate to be working on something and since ws reform could not be, they went too work on the other……………It has been a major tactical failure on two fronts, obama wants partisanship and tried working towards it…………………..yet what do the repubs do in there strategy room, “well, in 08 we had an inept president to defend, a silly old man candidate, and a nut job vp, plus the economy imploding, and we had too get mickeyain elected………well, we only got one job too do now, destroy barrack and pick up seats in 2010, we will nod politely smile and him and tell him yes we want too be partisans, and then we will gin up the propaganda of destruction” ……………….democrats in the media love too discuss idea’s and they always have 3-4, republicans they always have one and they scream it from the yardarms until it is acknowledged………….
September 9th, 2009 at 8:11 am
great post BR-
the exact sentiments of many people out there including myself
September 9th, 2009 at 8:13 am
Our tribal political system, in need of money, will always defend the monied interest. Health care and financial reform will only be a new coat of paint on the same old pig. An example is tobacco legislation and tobacco kills a thousand Americans a day. Compared to bankers and the medical industry ability to donate, tobacco was a light weight.
September 9th, 2009 at 8:16 am
I voted for Obama because of two individuals; Larry Summers and Paul Volker. Subsequently to learn that Summers had already been compromised via a part-time $5 million a year gig with a hedge fund and to observe that Volker has all but disappeared from the scene. I can only conclude that Obama used Volker just for the purpose of gaining middle class voters.
I have lost all confidence in Obama and his administration. He and they appear to be disingenuous, crafty, self-serving and piously arrogant. One might even conclude elitist.
I really had wanted to like the man, but I guess while you can take the organizer out of the community, you cannot take the activist out of the community organizer…….
September 9th, 2009 at 8:18 am
Couldn’t agree more. Obama could have done so much in regards to “financial cleanup” if he chose to do so. People like me who are ideologically opposed to him would have no hesitation in supporting meaningful wall street clean up. But he blew up big time.
—————
Hilarious.
This guy was stuck between a rock and a hard place from the very beginning. Can’t anybody see this?
The entire American is screwed up and it has been in the making for many decades. Can you really expect a guy to fix it in a matter of months?
No matter what he touches, he will negatively impact other stuff because the economy is like spaghetti. That’s the nature of the beast.
September 9th, 2009 at 8:19 am
danm, the longer you wait the harder it will be.
More than 90% of americans not only want to see a meaningful clean up of wall street. They also want to see some heads roll. The longer you wait, the harder. In my estimate it’s already too late.
September 9th, 2009 at 8:21 am
this: Mikhail Sergeyevich Says: September 9th, 2009 at 7:50 am
Barry: You assume this was error, not strategy. There is neither political will nor ability to reform our financial system. Distracting the populace is the surest course to assuring continuance of the system that provides milk and honey – regardless of whether it be extracted via 401k, pension plans, excessive consumer debt, when needed, direct taxation.
Also, don’t forget, health care “reform is an honestly difficult political issue. There are many that believe the current system is perfectly developed to continue to extract value from the masses at am optimal rate, while others believe that there is room for improving extractive value by adding additional direct tax subsidies now. Don’t expect true healthcare “reform” until it becomes clear that increasing margins for the industry will require additional tax subsidies. On that day, we will surely see bipartisan reform.
to me, is a post that should not be overlooked. While, potentially, uncomfortable to accept, We should understand that this incarnation of *our government* is little more than a well-engineered Machine that extracts Liberty and Wealth from Us, as Whitney’s Gin extracted seeds from Bolls..
~
http://taxprof.typepad.com/taxprof_blog/2009/09/obama-proposes.html
http://philosecurity.org/2009/09/07/what-does-dhs-know-about-you
September 9th, 2009 at 8:23 am
danm, the longer you wait the harder it will be.
——————–
madman130:
How old are you?
Most 45 or younger have not got a clue. Those in the know want it to happen now because they know the day of reckoning will happen in their lifetime.
But the boomers and older will do whatever it takes to push it off so they don’t have to deal with it in their lifetime.
September 9th, 2009 at 8:24 am
@ danm: Sounds to me like you are in line for a nice bonus this year…..
On a serious note, it is a false argument to say we cannot clean up Wall Street because the economy will fail. There is plenty that can be done to restore faith in the economy and our governmental institutions. Instead there is complete and absolute silence. And in this silence breeds uncertainty, fear and paranoia.
Obama has lost many of us and he is not going to get us back now with feel good speeches that say what we want to hear while he does what he wants to do. We have already been down that road……..
September 9th, 2009 at 8:29 am
It seems fairly easy to regenerate this crisis when desired. Obama need only say “now might be a good time to sell stocks.” Given the “national securitization” of the economy and Obamas naivete in the world of finance, it seems he has taken a practical approach.
September 9th, 2009 at 8:29 am
danm,
Oh please. We were told that this guy was a superman and could fix anything.
But Seriously, no one is talking about fixing anything in six eight months. Your side should drop this childish accusations any time someone is critcal of your god. 6months is enough to judge how the next few years is going to look like. That is all we are saying. The way this guy is going, he will never fix it. He has no intention at all. Come to think of it, who was the biggest beneficiary of wallstreet last year? Oh, it was the kenyan irish, wasn’t he?
As a matter fact it has been almost a year he own. So in this time of “crisis”, you would think that they have been working on plans since November 5, but I guess this is too much ask from an elected official in this country.
September 9th, 2009 at 8:35 am
On a serious note, it is a false argument to say we cannot clean up Wall Street because the economy will fail
————–
Just like it’s a false argument to say that it will succeed.
I don’t know if you’ve ever done some cleaning up but it takes much longer than making a mess. And this mess has been in the making for a few decades.
Secondly, when you fix something you must assume that somebody out there will know how to manage the new entities with a new vision. Who are you going to hire? The ones who made the mess or those from other industries who have no idea how to manage a bank? You’ll probably hire the ones who made the mess and it’s hard to teach an old dog new tricks.
Thirdly, the financial industry is so pervasive that it is even in you bedroom so yes, if you change the rules, it will touch every aspect of Amercian life. That means many industries will fail and many more will be born. That can be a good thing but the problem is that the largest segment of our population is about to retire and will cling to the status quo before making huge changes.
I agree that the financial industry needs to be fixed but in practice, it’s going to happen only when government propping up will not work. We’re not there yet. Too many players will hang onto to the status quo.
September 9th, 2009 at 8:36 am
…here, here Ritholtz
September 9th, 2009 at 8:39 am
madman130:
Look. I don’t care about your presidents and your political parties. I think they are puppets and the mess is so big that it’s not one person that will be able to fix it.
I think it is funny how much hope people put in the presidents.
I think that no matter who had the job, the US would be going through the wringer anyway.
September 9th, 2009 at 8:43 am
weird, per law he’s only been in charge six months, he probably spent a few months getting his troops in position…………the thing is most folks don’t listen, he’s said health care was a priority all along, for like since he got elected in 96, seriously he choose to not tinker with financial reform cause it is a nightmare, jeeze the banks are still on fumes and the pps of major indexes set a tone, you had six months of irrational volatilty……..they wanted to let the erractness subside, that decision can’t be criticized for the most part…………he also had iraq and afgan and other world issues on his plate, in a simple to do list scenario on reform he choose to put it aside for now………….problem is employment going higher and pretty much zero job creation, i’m sure they were hoping for better…………..imho, it’s just a plain tactical mistake, the fear of being branded a socialist by the republicans while 80% of the people were copacetic with reform and ASAP, no one disagree’s it needs to be done, so you sould just go do it……..period end of story, just do it, and he hasn’t……………mark my words cause it is coming……..he will be branded David Barack Dinkins, and continously be in a fight until he shows some anger and passion and takes control rather than trying to make everyone happy, happiness is our own responsibility………as the chief law dude he needs to show us what ones matter too him, he hasn’t done that
September 9th, 2009 at 8:43 am
No doubt some momentum has been lost on this front, it will be interesting to see what becomes of all the state level legal activities. Surely some heads will roll from that. That hand-to-hand combat has just started. The heavy artillery can still be deployed once the trenches are decided.
September 9th, 2009 at 8:44 am
danm,
I agree 100% with your conclusion. I have given up on politicians since last election. Voted for Bob Barr last time around cause couldn’t trust any pubies and rats.
September 9th, 2009 at 8:47 am
Amen.
September 9th, 2009 at 8:49 am
>> Oh please. We were told that this guy was a superman and could fix anything.
That was a fiction created by GOPers to take the guy’s strength (his competency, especially relative to the GOP candidates) and turn it into a weakness (“he’s full of himself, so you should dislike him”).
>> Never seen this bunch of incompetent boobs in my life.
In your “life” or just not in the past “9 months”?
September 9th, 2009 at 8:50 am
>> I have given up on politicians since last election.
If we do that, the lobbyists win. Er, win bigger.
September 9th, 2009 at 8:53 am
Totally agree BR.
No strategy, no will, no change…all talk.
September 9th, 2009 at 8:55 am
On the topic, I can’t tell if this was (a) a plan like danm thinks or (b) a blunder like ignoring Richard Clarke to focus on missile defense. I kinda suspect it to be the latter.
But, seriously, beyond finance, there are too many issues left over from the last administration and too many balls in the air. 9 months to fix a decade of mistakes? In some fields, fixing the problem takes as long as creating it.
September 9th, 2009 at 8:56 am
One of the things we learn only by experience is the importance of FOCUS. Obama has no experience at actually managing anything, so it is perhaps understandable that he is trying to do too much. It doesn’t help that his advisors have differents agendas.
September 9th, 2009 at 8:58 am
Spot-on, BR.
September 9th, 2009 at 9:00 am
I do not understand how any reasonable person can assume good intentions from anyone or anything involved in the American political/economic/legal system.
Paraphrasing someone who really understood the nature of power in a democracy, if voting really changed anything in the US it would be illegal. The only reason that we still can vote is because the people who really matter control the “serious” choices between one group of far right corporate whores and another group of merely right corporate whores.
How many times do you have to get screwed before you ditch the panglossian worldview and accept the fact that the United States is designed and run to extract the maximum amount of money from the majority of its population regardless of the circumstances? Act accordingly or I am not interested in hearing complaints.
September 9th, 2009 at 9:03 am
[...] see. How many of you can sing “We Can Work It Out” and how many of you can tell me who Max Baucus is? (And I’m sorry, but “something to do with …” is not a valid start to [...]
September 9th, 2009 at 9:07 am
Saving the economy was Obama’s first crisis, and it was handed to him as a hot potato. That he chose to support the structure of the system we had in place — and in doing so, rescue the very people who had put the structure in peril to begin with — was the poorest choice off of a menu of bad choices (in the end, it may have been the only realistic choice at the time, and under the circumstances).
Healthcare is an entirely different crisis — one that has festered and turned malignant under “conservative” government (operating under the same the same principles, ideologies and policies that destroyed the economic structure). As proof of this statement, one need only compare the cost vs. quality, accessibility, and range of healthcare in other developed nations with their various and respective solutions to to providing basic medical care to their citizenry.
It is also enlightening to track the growth and development of “healthcare” as an “industry” in the US. Insurance is not healthcare. We argue over the cost of healthcare, when in reality it’s the insurance companies and HMOs, not the actual cost of healthcare, that are driving costs up. It wasn’t that long ago that insurance companies charged premiums that were affordable enough to cover most citizens suffering most diseases (in fact, health insurance came with employment, at a cost that was manageable by the employer). What changed? The industry was deregulated (just like the banking industry).
In the end, it’s all academic, anyway. Without borrowing, we can’t afford healthcare, or saving our banks. Without borrowing, we can’t afford our bloated military and the attendant and constant political need to create justification for its existence. Without borrowing, we can’t afford “higher” education (as with healthcare, the US gets a very poor ROI for money spent on education, both primary and secondary – our educational institutions will sell a degree to anyone with enough money, regardless of any other qualification). Hell, without borrowing, we can hardly pay the interest n our debt.
The seed of our decline was planted in our national gut when we foolishly swallowed the “conservative” parasite (not really conservative at all, but, like most parasites, a mimic of the real and beneficial critter). Now, we’re living the disease. Deregulation and its attendant graft, corruption, cronyism and criminality, privilege without responsibility, lawlessness with impunity at the highest levels of business/government, and intractable debt (brought on by low or no taxes on the wealthiest, compounded by profligate government spending to benefit that same) are all manifestations of our infection.
With our inability and unwillingness to manage our social structure by appropriate taxation and distribution of governmental resources, healthcare and economic recovery are moot points.
______________
Bruce in Tn: Since you’re wondering if the $3,800 fine will be a way to force people to pay for the “public” option, it’s somewhat disingenuous that you failed to note that the fine was proposed by Max Baucus, a devout Republican and a high priest of faux conservatism. If Mr. Baucus is looking for ways to pay for healthcare for the hoi polloi, he should, perhaps, consider turning his jaundiced eye and dishonest mind to some of the waste and criminality he himself helped spawn. For instance, the cost of the Iraq war would have paid for healthcare for every man, woman, and child in the US.
September 9th, 2009 at 9:21 am
…well stated Marcus,
might add, re. healthcare and insurance companies – the Dr’s, and in particular “Family Practitioners that have a financial stake in the “testing clinics” to which they refer there clients, err patients…
September 9th, 2009 at 9:25 am
Oh yeah, and another thing i should have added:
“Conservatives,” under the mantle of “tort reform” would target jury awards to those injured by medical malpractice as being responsible for the increased cost of medical care, when it’s obvious that obscene corporate profits add far more to the cost of healthcare than any judgement for compensatory and/or punitive damages against a healthcare practitioner. Again, the conservatives tilt the playing field against the middle and lower classes, an insane segment of whom cheer for their own disenfranchisement.
September 9th, 2009 at 9:26 am
Thanks, Wes.
September 9th, 2009 at 9:30 am
Spot on, BR. A titanic miscalculation by 44. The worst kind of government waste.
September 9th, 2009 at 9:35 am
…“never waste a crisis”
Exactly!… It seems the plan (by failing to reform Wall St.), is to sow the seeds to a series of continued crises…
That ought to keep them busy thru 2012 & well beyond!
September 9th, 2009 at 9:44 am
@BR
The other intensely troubling aspect of lack of accountability is the bleed over to the public. In my office there are two examples. One person just bought an H3 while her credit is still good and is walking away from her home. The second just bought a large foreclosed home and is walking away from the home that she’s in. The rest of us marvel at how this can continue to go on.
The moral hazard is indeed a tragedy. Isn’t this stealing?
September 9th, 2009 at 9:45 am
By the way, this Ritholtz commentary is right on target. Obama will have no one to blame when the dems lose the mid-term elections and he gets bounced in 2012.
September 9th, 2009 at 9:45 am
I don’t think there was any “error” at all in this, I believe it went down exactly the way it was planned to go — a huge flurry of action-without-results, followed by zero regulatory changes. The same thing will happen in the health care arena, except that things will be changed to make health care even more expensive and lucrative for it’s patrons. This is politics to please the lobbyists, right out in plain sight, nothing more. A masterful performance.
September 9th, 2009 at 9:49 am
[...] Posted by Chill on 09 Sep 2009 at 09:48 am | Hmm, hadn’t thought about this before. There was a narrow window to effect a full regulatory reform of Wall Street, the Banking Industry [...]
September 9th, 2009 at 9:50 am
I have to agree with you, Barry. I just proves how entrenched in our government are ex and current WS’ers. Not dealing with the criminals in the previous administration was another big miss.
September 9th, 2009 at 9:57 am
One fallacy I think that has been undermined is all the prattle we heard around the time of the election that in bad economic times, the scales fall from people’s eyes as they wake up from their bubble-induced illusions of financial security. Consequently, so goes the narrative, the electorate will support “progressive” candidates and policies.
But in reality, the New Deal and support of FDR in the Depression were an historical anomaly. Most industrial countries at the time, to the extent they made a significant political shift from the status quo, went to the Right – sometimes the radical Right or outright fascism. Even now, I note that despite the severity of the recession, and all that implies for the Right’s fallacious economic nostrums, most major countries in Europe are moving rightward. Labour is almost certainly a goner in the next UK election; the SPD in Germany is weakening by the day; the Socialists in France are collapsing; and Berlusconi keeps getting more entrenched in Italy despite his bad personal qualities and questionable policies.
The mental processes that a depressed economy imprints on the petit bourgeois (social fear of a loss of status and a sinking into the ranks of the despised lumpenproletariat) work in exactly the same way in the US, with the added ingredient of race to make the phenomenon even more vitriolic. Hence, in times of a grim economy, people are more likely to turn Right than Left; the reasons aren’t explicable in terms of the rational choice theory, but they make psychological sense if you bring status anxiety into the picture. When you add to that thousands of veterans returning embittered from a war “lost” by Obama (in the right-wing meta-narrative, none of it was Bush’s fault), you potentially have some pretty volatile ingredients – particularly as there are thousands of Blackwater-type mercenaries who lack the discipline and the ethics training of the regular military, and whose worst tendencies were encouraged by right wing fundamentalist corporate management. Maybe a stretch, but they could constitute the nucleus of a Freikorps.
September 9th, 2009 at 10:07 am
I agree w/you completely. In fact, I’ve been saying all this since BO announced his econ team prior to inaugeration. This was utterly predictable.
September 9th, 2009 at 10:13 am
Barry Ritholtz:
Good points. Notice how the right wing no longer supports the GWOT (I’d feel sorry for the Dems if they weren’t so goddamned stupid — they fall for this shit every time). Notice how we (right or left) no longer talk about the cost, in lives or treasure, of these little escapades. Notice how the corporate/government hybrid — composed mainly of shit-talking chickenhawks — gives voice to the most ignorant and violent element among us (if they can get Cletus and Charlene riled up, they won’t have to put their own cowardly asses on the line).
September 9th, 2009 at 10:15 am
Sorry, that last comment was in response to Marshall, not BR.
September 9th, 2009 at 10:15 am
BR,
Apologize this is OT but here is the Mish response to your unemployment chart and post yesterday:
http://globaleconomicanalysis.blogspot.com/2009/09/depression-debate-is-this-depression.html
~~~
BR: I have been exchanging emails with Mish — I expect to have a response up this evening . . .
September 9th, 2009 at 10:28 am
Hence, in times of a grim economy, people are more likely to turn Right than Left; the reasons aren’t explicable in terms of the rational choice theory, but they make psychological sense if you bring status anxiety into the picture.
————-
But it’s very rational. When you are disenfranchised, feel your voice is not heard and when fighting for your rights is a lost cause, you will do whatever it takes to take away rights from other people around you (union busting, fighting against a social net…)
September 9th, 2009 at 10:46 am
Your obsession with more regulation is astounding. The SEC, FED, Congressional oversight committees, and every other regulator failed us. How is that not obvious? [BR: 3 decades of radical deregulation, and you claim regulation failed us? While the SEC was gutted, the Fed was being led by a radical deregulator/Ayn Rand acolyte. WTF have you been looking at for these years ?]
What you need to do is create incentives and penalties that alter the behavior of corporate boards and executives.
Hold CEOs and boards liable by making the CEOs and directors put enough of their net worth in the company that if their company fails, they feel real pain.
Reward them handsomely for success, but make the compensation and pensions paid in prior years subject to painful clawbacks if they drive thier company in the ditch this year. Allowing Chuck Prince to walk away with a multi-million dollar severance package for failure is absurd. Allowing Robert Rubin to keep the $100 million he’s taken from Citigroup shareholders over the years is idiotic.
September 9th, 2009 at 10:49 am
O should have waited for another year to introduce his Health reform bill. Instead he should have focused on cleaning up the Financial mess. I mean really cleaning up the mess, not just talk about it. He/congress gave too much power to Fed. Fed is doing everything they can do to artificially keep the markets up. But we are not fixing the underlying problems (debt overhang, Financial regulations). As long as we are rewarding the people who were responsible for this mess (IBankers, over borrowed consumers etc), we will continue to dig deeper and deeper. As much as I like O (although don’t agree with some of his policies), he might very well end up as a one termer. Franklin might jump on me on this one.
September 9th, 2009 at 10:55 am
Groty Says:
“Your obsession with more regulation is astounding.”
________
The relationship between deregulation and decline tracks too closely to be coincidence. You write, “but make the compensation and pensions paid in prior years subject to painful clawbacks if they drive thier company in the ditch this year.” How is this not regulation?
September 9th, 2009 at 10:56 am
Most excellent Barry !
> Yes a colossal blunder that missed the best chance to clean up Wall Street in five generations.
Instead with get a continued dysfunctional economic system that’s totally dependent on increasing debt, faux GDP growth, bubbles with MSM and politicians on both sides kicking the can down the road.
This will not end well for majority of Americans who will be relegated to lower standard of living.
I see a viable 3rd party coming into existence within next decade that hopefully can win ( shades of Ross Perot but one that can win over the inept bought and paid for fools we have in Congress today )
September 9th, 2009 at 11:01 am
i wonder. 8 years of a greedy, self-serving “moderate” democrat. followed by 8 years of an incompetant “compassionate” republican. blend ‘em together and we now have a greedy, self-serving, incompetant liberal something or other in the driver’s seat.
if there was just a political leader from as far away from washington, d.c. as possible. who was plain spoken with common sense. someone willing to take on and defeat the large corporate interests. someone who rooted out corruption in government. if only……..
September 9th, 2009 at 11:03 am
And how much responsibility do the folks who voted for Obama (and bought into his BS) actually bear?
~~~
BR: As much as the folks who voted that fool “W” into office do . . .
September 9th, 2009 at 11:11 am
This was not a “tactical error.” No, this was an error of the “invading Russia during the winter” type.
The only hope we have to turn the economy around before deflation really gets going is to clean up the mess in the banking system. Obama is not only kicking the can down the road, he’s helping fund a perpetuation of the status quo ante, and making the problem worse by making “to big to fail” into “even bigger than too big to fail.”
As it is, the reason why Obama has shown no interest in pursuing a different course of action as Bush is that Obama comes from the same mindset and cohort as Bush: Ivy League graduate who thinks he’s oh-so-terribly-smart. These people infest the corridors of finance, government regulatory agencies, Congress (eg, Barney Frank) and DC think tanks, so there’s an entrenched group-think that refuses to make any real and substantive change that would upset the comfortable existence that these parasites have created for themselves.
The push for “healthcare reform” is naught but a distraction, a tactic akin to Rockafeller handing out dimes to street urchins.
September 9th, 2009 at 11:13 am
I suppose it’s wishful thinking, but Obama still has the opportunity to break stride here and set his sights on doing everything you suggest BR…
We’ll just call the first 7 months a “rookie mistake”… It happens…
O?, Rahm?… are you all listening here? Don’t make Cuomo go it alone on this!
September 9th, 2009 at 11:25 am
And they’re fast losing credibility with SUPPORTERS in the process. Not good. If you’re going to alienate a group, it shouldn’t be your supporters.
September 9th, 2009 at 11:30 am
a tremendous thread going .. lots of views pro & con to the direction needed on 1/21/09 (1st day after the party) .. I was luke warm about getting in the thread till Marshall’s post:
that .. was .. um .. what library room shelf did those thoughts come from .. or what classroom curriculum .. Kings&Queens 1201?
should leave more than that .. the hallabaloo over yesterdays speech to the children .. we are fighting for power big time in the good ole USA .. comes from desperation with failing systems .. now that the question is raised and pov’s are coming in fast and furious .. the die was cast .. we’ll see what comes our way in the new fiscal year of 2010 in a month or so
September 9th, 2009 at 11:32 am
dsawy, good anaolgy on russia, the only thing we don’t know is what bernanker geitner etc. keep telling him, remember all countries are re-inflating not just us, perhaps bernanke does have some plan to get out of dodge, which i doubt…………the reason why most us are po’d is because he’s talked a tough game from time too time, yet, done nothing tough or heroic, taken a stance, to basically do something like change we can believe in………..it’s a government bubble plain and simple and too be part of it is disingenuous, which he did not come across as……..right now, i’m giving him the benefit of the doubt cause i’m not in the room, yet, he better start he better start SHOWING SOME STRENGTH or he will be branded weak, which is what the other party wants
September 9th, 2009 at 11:35 am
My point is that deregulation, per se, isn’t the problem. It’s the perverse incentive structure, where excutives and boards feel no pain for failure, and in many cases are rewarded with robust severance packages for failure, that is the problem.
If the incentives/penalities are right, then everything else (i.e., excessive risk taking, excessive leverage, etc.) should fix itself.
I don’t see how bringing back an 80 year old regulation, Glass-Steagal, solves anything.
September 9th, 2009 at 11:38 am
Barry,
Your mistake is in believing Obama wanted change. That was campaign rhetoric. It was always business as usual. And as you said, the lobbyists own Congress and this nation lock, stock and barrel.
September 9th, 2009 at 11:39 am
Anyway, reforms would only be bad for this awesome bull market. So we can’t do financial reforms.
September 9th, 2009 at 11:43 am
It really doesn’t matter — unless you care about the size of the impact crater. An economic “system” is a force of nature, not a mechanism of Man’s design. All that we can do with out regulations and restrictions on the types of activities is to attempt to channel the flow of that river. When fools along the river dam it to create more shoreline and thus more “waterfront property”, it is a folly that is doomed to failure. Reinforcing the dams will work for a time, but only a brief period. Eventually the dam fails and the rushing waters destroy everything.
So it is with the criminal practices in the financial industry and the health care industry. If the pols will not act to prevent the artificial manipulation of these tributaries, they will fail, with a terrible destruction upon everyone, at some point in the not-too-distant future.
In our case, the pols (Republicon and Demoncat alike) are actively working very hard to ensure that their benefactors, the lobbyists and the corporate citizens they represent (these would be the class A citizens, who vote with $$$, not the class B citizens who vote with ballots), are taking the maximum benefit from the efforts of the class B citizens (for that is where the wealth comes from — not the HFT or paper-shuffling of the fund managers and banksters).
Stay liquid, stay nimble, stay healthy. You are on your own.
September 9th, 2009 at 11:50 am
[...] The Big Picture [...]
September 9th, 2009 at 11:51 am
Agree with many of the posts in this thread. Six months is hardly enough time to judge a presidents entire term – does anyone remember what happened in the first six months of GW’s presidency? Was he defined by those six month? Or was he defined by 9/11, or Iraq? A lot can happen in the next three and a half years.
That said, I’d give him a D for his first six months. If he keeps this up, and if he drops the ball on health care reform then he’s lost my vote next time around.
Also, let’s keep in mind that the President does not live in a vacuum and contrary to right-wing propaganda he is not a dictator. Obama cannot change all the laws himself, re-regulate the financial industry, and punish those who need punishing. To do all of this takes congress as well and everyone posting here knows full well that this goes far beyond Obama failing to act – he may very well have been planning to act until the powers that be in congress told him that there would not be the political will to pass any meaningful legislation.
We may also be missing The Big Picture here. Who’s to say Obama is not allowing the re-inflation of the bubble to move forward because he knows that if a second bubble pops within the next year or so he’ll have more than enough support in congress to make all the changes he wants.
September 9th, 2009 at 11:56 am
@torrie-amos
“perhaps bernanke does have some plan to get out of dodge”
—
Bernanke was the one that denied we were going into Dodge in the first place when he suggested that subprime was “contained” many moons ago…
September 9th, 2009 at 11:59 am
@Thor
“Who’s to say Obama is not allowing the re-inflation of the bubble to move forward because he knows that if a second bubble pops within the next year or so he’ll have more than enough support in congress to make all the changes he wants.”
—
Well that would be TRULY evil now wouldn’t it?
September 9th, 2009 at 12:01 pm
…I mean, Thor…
I’ve considered him arrogant and a bit naive all along, but EVIL never really entered my mind…
September 9th, 2009 at 12:02 pm
@ Marcus: Again, the conservatives tilt the playing field against the middle and lower classes, an insane segment of whom cheer for their own disenfranchisement.
You throw around terms too broadly:
“tort reform” would help cut out extortion and economic theft by attorneys. They produce very little that benefits society.
“deregulation” can help free up productive economic behavior. No question we have too much destructive regulation which throttles our economy. It’s a question of what is and how it’s “deregulated.” But you and Barry who loudly decry “radical deregulation” are helping the bureaucracies, and not helping towards growing the economy…
September 9th, 2009 at 12:05 pm
Cvienne – I know, I was just playing into the whole conspiracy theory
September 9th, 2009 at 12:07 pm
Thor?
A closet Conspiracy Theorist?
GET RIGHT OUT OF TOWN!
September 9th, 2009 at 12:09 pm
[...] Tactical Error: Health Care vs Finance Regulatory Reform | The Big Picture "There was a narrow window to effect a full regulatory reform of Wall Street, the Banking Industry and other causes of the collapse. Instead, the WH tacked in a different direction top pursue healthcare reform. [...]
September 9th, 2009 at 12:13 pm
cv, imho ben is like al, aloof and a black and white thinker, do i think he has a plan to get out of dodge, i think he thinks he does and it is the only correct and right one……….does obama have a choice, not really he fears touching the fed, and summers is his advisor………30-40-1 leverage took down the banks, to think the government can do it better is ludicrous, not because they are incompetent, just cause no one can handle that leverage, no one
September 9th, 2009 at 12:27 pm
Money talks. The peasants walk.
September 9th, 2009 at 12:29 pm
The best conspiracy theorists are those who live in the aluminum-foil-lined sanctity of their closets.
September 9th, 2009 at 12:31 pm
Good point, Barry. One minor quibble. The Tea Party game would have played out with a slightly different script, that’s all. The screaming opposition is a combination of professional astro-turf and traditional paranoids. They were going to do their level best to destroy the administration regardless of specific policy actions. Obama literally could be a white southerner who acted exactly as Ronald Reagan would have, and still get attacked by these people because he has a ‘D’ after his name.
September 9th, 2009 at 12:35 pm
@wally
“Money talks. The peasants walk.”
Almost right … but incomplete …
Money talks. The peasants walk, carrying those with the money on their shoulders.
September 9th, 2009 at 12:39 pm
Aluminum foil is too thin, it’s really not effective. I prefer copper. It has better sheilding properties, and investment value is superior to aluminum foil. Also, hat’s are not effective, you need a helmet with a full face shield, with the smallest eye holds you can manage with. Small holes allow only the high frequencies in.
September 9th, 2009 at 12:41 pm
@Seth
Interesting points Seth…
No, not really anything much you said after conveniently lumping everyone with a legitimate gripe into the “screaming opposition” category…
What I’m referring to is your use of the word “astro-turf”…
I have now found the perfect metaphor for the “green shoots” in the economy!
September 9th, 2009 at 12:42 pm
…unless you’re Boise State
September 9th, 2009 at 12:49 pm
[...] Barry Rithholz makes a great point: [...]
September 9th, 2009 at 12:59 pm
I was just thinking about this today. O going after healthcare instead of the banks was analagous to Bush going after Iraq instead of Saudi Arabia. Not that I don’t think that we need healthcare reform- I hope it works but the “19 hijackers” came from wall street.
September 9th, 2009 at 1:05 pm
[...] Is the moment for financial reform past? (Big Picture) [...]
September 9th, 2009 at 1:12 pm
Borrowed from the Oil Drum but equally applicable to this post:
Why do we generally have such low quality politicians when we need the very best and most strategic?
“Now, there’s one thing you might have noticed I don’t complain about: politicians. Everybody complains about politicians. Everybody says they suck. Well, where do people think these politicians come from? They don’t fall out of the sky. They don’t pass through a membrane from another reality. They come from American parents and American families, American homes, American schools, American churches, American businesses and American universities, and they are elected by American citizens.
This is the best we can do folks. This is what we have to offer. It’s what our system produces: Garbage in, garbage out.
If you have selfish, ignorant citizens, you’re going to get selfish, ignorant leaders. Term limits ain’t going to do any good; you’re just going to end up with a brand new bunch of selfish, ignorant Americans.
So, maybe, maybe, maybe, it’s not the politicians who suck. Maybe something else sucks around here… like, the public. Yeah, the public sucks.
There’s a nice campaign slogan for somebody:
‘The Public Sucks. Fuck Hope.’”
– George Carlin
We miss your wisdom, George.
September 9th, 2009 at 1:17 pm
Healthcare could be handled so easily by allowing anyone to join the ranks of medicare, and charging a premium based on the reported income on the tax returns. But, that wouldn’t satisfy the special interests. After all, somehow this has to be turned into a payoff to the big money contributors. Whereas, financial regulation would be the opposite of a payoff ot big contributors. So, it actually makes perfect sense.
September 9th, 2009 at 1:44 pm
Hi Barry,
On June 18, 2009, you penned a great response to the Obama Regulatory plan:
Obama Reform Plan Fails to Fix Whats Broken
After seeing your article, I jotted down some of my own thoughts that are very much in the same spirit as your article this morning:
Losing Political Capital
http://economicdarwinism.wordpress.com/2009/06/18/letter-to-obama-losing-political-capital/
I hope you don’t mind me including a quote here:
“You are on the verge of losing whatever political capital you had coming into office due to your refusal to acknowledge that the people you are relying on for economic policy are the very people who are responsible for getting us into this situation. Greenspan, Bernanke, Paulson, and now Geithner (and Summers) all continue to fail to see the causes of the crisis. As a consequence, current proposed regulatory reform is bound to fail yet again.
At this point, the rapid loss of confidence in both Geithner and Bernanke are weakening your ability to push your agenda in other critical matters. You must do something to remove them both or you will imperil your potential to accomplish lasting and necessary change.”
So much for that idea…
The lost opportunities are a real shame. I wish they listened to you.
September 9th, 2009 at 1:47 pm
Look at the problem they have in the fight for health care reform. Affordable health care, with a public option to make sure that prices are kept down, is pretty much in everybodies interest. The only ones realy hurt by such a plan are the CEO’s of private health insurance companies who may no longer be able to suck their $40 million annual bonuses out of the system and still stay competitive. Yet Wall Steet banded together, ordered their media labdogs into action and the whole thing is in trouble. All over the country you got Joe 6 packs dropping their pants, greasing their dum a$$es, and saying “come and take me Wall Street before big bad government can provide me with better care for lower prices”.
I think it is pretty naïve to think that the administration has any chance of getting any meaningful reform of Wall Street past congress. It would be a serious threat to the $40 million annual bonuses of ALL of our corporate masters. You would immediately get an all out campaign from all the corporate media to label such reform as soci@lism, and little houswifes from rural Ohio would be on the screens 24 hours/day crying about what “they” (this terrible black man and his soci@list friends) are doing to “our” country.
The administration did right by starting with health care as the test of how much control corporate American has over the country, and the information, and the message. It turns out that right after a major royal f*cking by Wall Street, the people are still so afraid of the only entitiy that can protect them (we the people) and of Wall Streets invented buggy men (“black male” and Soci@lism), that they are willing to take another major royal f*cking from Wall Street, in form of continued rising prices going straight into the pockets of those same leaches.
Now the administration know that they cannot even win the little fights, so they will hopefully be smart enough to not take the big fight head on. They should realize that rather than big comprehensive reform, that can easily be distorted and cherry picked for sloppy wording of one little sentence in a 1000 page document, they need to keep it simple. Reform has to come by 100 little incremental proposals that can be sold easily and cannot be distorted by Glen Beck or other little Wall Street slaves in the corporate media. Anybody that vote against any of these proposals (like a 90% tax on bonuses over $ 1 mill) can then be attacked in their primary or general elections as the Wall Steet slaves they are.
September 9th, 2009 at 1:51 pm
A couple of points
1) Deleveraging was going to be fugly no matter who is in charge. The time to deal with the gross problems in this country is probably already past.
2) People get the kind of government they deserve. When dishonesty is the standard for the citizen, who expects an honest/competent government. Won’t happen.
Think about it.
September 9th, 2009 at 2:01 pm
Marcus,
Great response. The greed and corruption of both parties is now coming home to roost. All of it has it’s roots in the financing of campaigns, big money lobbyists and the open pockets of those who support that system.
It is the reason why inexplicable decisions and policy positions are taken. Money and Power.
September 9th, 2009 at 2:06 pm
Got your back on this one, Barry. No matter what political party is in the White House “change” is controlled by those who control the money supply. Politics is a distraction to keep us from focusing on the handlers of our presidents. We’ve all talked about changing it, how many years have we done that, and now we’re almost $12 trillion in debt while the bankers still get bonuses. Millions of Americans out of work, less jobs being created, millions of home foreclosures while the bankers still get bonuses.
September 9th, 2009 at 2:21 pm
The idea that “both parties” are [whatever bad] is another Wall Street talking point. The fact is that 95% of the GOP and a little less than half of Democrats are Wall Street slaves. However, although that means that any direct rebellion against our corporate masters and their interests are unthinkable, it does not mean that it makes no difference which party is in power. Anybody with half a brain can look at the legislation passed by each of the parties and recognize that there is a clear difference in the amount of legislation serving the people passed by each party. However, it serves Wall Street perfectly to get people to think that there is not difference, because then they are more likely to vote for the party that always serve the people on a silver platter to Wall Street. Our corporate masters have learned from our previous British masters – divide and conquer.
September 9th, 2009 at 2:23 pm
I’ll say this much…
..To quote Obama, the man himself (quoting something much more ancient):
“Hold firmly without wavering, to the hope that we confess”
http://killingthebuddha.com/mag/witness/the-supreme-love-and-revolutionary-funk-of-dr-cornel-west-philosopher-of-the-blues/
–
He is my opinion: We need to stop whining about a Rich Man’s Crisis. A Rich Country’s Banking Crisis.
Speaking of Mish, if we are gonna be honest, I have to agree with the sentiment of “Just Let it Burn”, no exceptions. Then people can decide for themselves how they feel about Wall St.
You honestly think regulation is going to reverse the damage already done?
How about this, Bernie Maddoff was nearly chairman of the damn SEC himself. You think this type of thing will ever change? Fools with other fool’s money. What the hell do you expect?
–
National Health Care is a fundamental shift in our nation’s priorities, kind of like Civil Rights or women’s suffrage. This is fundamental HUMAN PROGRESS for our nation.
The Big Picture Indeed.
September 9th, 2009 at 2:44 pm
“I have to agree with the sentiment of “Just Let it Burn”, no exceptions”
The problem is that the people who set up the fire and poured the gasoline on and threw the match in, are all long gone with all their money in foreign bank accounts. Those who get their a$$ burned in this fire are the people who did not have the time (they were busy building this country), the ability, or sophistication to recognize the problems and get out in time.
So I am absolutely against this cr@p about “let it burn”. Now if you say “let THEM (the banksters) burn, then I am with you
.
September 9th, 2009 at 3:51 pm
When will people get sick of this political nonsense and vow to make a change.
We need to take back this country from the corporations. Spread the word…vote out every incumbent!
If 10% of the population with participate in a vote-out-the-incumbent drive we could change everything. Campaign finance reform and term limits would go a long way toward fixing the problem but the corporations are the ones writing legislation so it will never happen.
We can change this country with our votes. Don’t consider their political party affiliation. The Dems and the Repubs are one and the same “corporate” party. If we throw out every incumbent during the next election you can bet the rest of the worthless bunch will sit up and take notice.
Spread the word on every blog. The internet is the most powerful tool ever available to the common person if we’ll just use it to get organized.
September 9th, 2009 at 4:02 pm
My only hope after watching the Obama Misadministration screw the proverbial pooch over the past months is that Americans will start to realize that BOTH PARTIES SUCK!!
Both the Democratic and Republican Party are BOUGHT AND PAID FOR BY USAINC.
If you really still believe that any politician has your best interest at heart…..I gotta this beautiful property you need to see!!
It’s very sad. Our “Government provided the means and averted their eyes as our nation’s wealth and future has been systematically leveraged off and dismantled by Banksters….in the name of “capitalism”.
We’re fucked.
September 9th, 2009 at 4:04 pm
You’re right, Barry. And worst of all, Obama and his staff ignored the lessons of succcessful presdiencies like those of FDR, Lyndon (domestic agenda) and Ronnie. However, the execrable behavior of Republicans over the last months will not lead to a desire on the part of the majority of the electorate for the restoration of the Texans and their fellow creationists to national government.
September 9th, 2009 at 4:13 pm
Dedude,
I would check the math. When the bailout passed last year, there were more democrats who voted for it than republicans. It’s a myth to say that the republicans are the party of rich.
No saying current bunch of republicans are any better than democrats, but the truth is the truth.
September 9th, 2009 at 4:16 pm
@Thor
“Who’s to say Obama is not allowing the re-inflation of the bubble to move forward because he knows that if a second bubble pops within the next year or so he’ll have more than enough support in congress to make all the changes he wants.”
I just don’t see how a crash helps O in any way. But I might be convinced that it helps the people who want to make sure his 4 years go down as a complete failure. The term “miserable failure” comes to mind.
How do the history books treat Hoover these days??
Sunsetbeachguy has some good points. With the distinct exception of our Founding Fathers, the whole “American Exceptionalism” meme is looking a bit raggedyass these days.
September 9th, 2009 at 4:48 pm
Christopher, annicat;
You are shilling for Wall Street again. Everytime someone says that both parties are equally bad the bankster and corporate media slaves clap in their little hands and cheer them on. Nothing they like more than a couple of obedient little shepple talking up hare brained ideas of how to “fix it” and losing sight of the fact that one party can be saved, whereas the other is 95% Wall Streets personal property. If people think it is impossible to take back the Democratic party, they must be completely in lala-land thinking that they can endrun Wall Street AND both parties. It’s like saying I can’t get over this 5 ft. bar but I am going to jump that 10 ft bar over there.
September 9th, 2009 at 4:55 pm
Madman130; you need to tjek out who would have been hurt in a complete collapse of the financial system last fall. The banksters had long ago secured themselves with their huge bonuses from previous years in safe foreign bank accounts and comfortable compounds in “safe” countries. The real hurting would have hit teachers pension funds and regular peoples life insurances that had been invested in “safe” AAA rated paper. But you are not the only one that has been tricked into shilling for Wall Street by attacking the only party that has any chance of ever bringing the current bankster tyranny down.
September 9th, 2009 at 5:11 pm
I agree 100%. You have it exactly right and for things to have gone in a different direction considering what we had gone through in the Fall of ‘08 is really strange. It would seem so sensible to take on Wall Street first and get financial reform out of the way right out of the blocks.
Instead we find ourselves here debating what healthcare reform even means. This healthcare debate is just a distraction. Should one be concerned about the bill from his doctor is his house is fully engulfed? That is what this Country is doing. NOTHING materially has changed NOTHING!!
If he doesn’t seriously reform Wall Street before 2012, he will have made himself a one-term President.
If we put the guys/gals in and they don’t perform consistent with their campaign promises, then throw the bums out!! His most blatant broken promise was not having any lobbyist in his Administration. Well, I guess that was just a damn lie! Kind of like lying on your taxes among other things. You just do it and say “Fuck’em” under your breath and move on.
Yes, You are right. We are all watching with our eyes wide-open.
September 9th, 2009 at 5:33 pm
Dedude,
The delusion you show is deep. Only Obamacare can fix it I suppose.
Just answer my 2 questions:
1. How many democrats vs republicans voted for bailout las year?
2. Who’s stalling the “audit the fed” in Congress (both houses)?
September 9th, 2009 at 5:52 pm
For this to be a tactical error Obama would have had to be serious about both financial and healthcare reform. I see no evidence he was or that he had any real grasp of how serious the problems were or how difficult the solutions would be. I suspect that his question on November 5, 2008 was much like that of Robert Redford’s character in The Candidate. “What do we do now?”
Job one should have combined reform of the financial system with reform of campaign finance. They could have been tackled together were the administration seen as being willing to take over all the TBTF financial institutions and wind them down to the maximum detriment of the executives, shareholders and bondholders. Think of it like holding their heads in a bucket of water until they agree. The deal should have been: You get a chance to survive in a greatly diminished capacity in return for supporting public financing of campaign finance reform. But they never had the vision, let alone the huevos to bring that off.
September 9th, 2009 at 6:05 pm
madman130; the relevant question for any action is who would be hurt most with or without that action. Untill that question has been answered your questions are irrelevant. But I guess that shilling for Wall Street is a lot easier than trying to answer a complicated question. I mean those Democrats must be stopped before they succeed in curbing the abuse of debitcard and cheking account fees. I mean next time it may not be possible to have GOPsters ensure that the curbing in abuses are delayed long enough to allow the banksters one last huge suck on the consumers, before legislation goes into effect.
September 9th, 2009 at 6:12 pm
My opinion on health care insurance reform is posted at 1:47 but don’t bother reading it if you are one of those who are shilling for preservation of the $40 million annual bonuses for private health insurance company CEOs, it would be a waste of your time.
September 9th, 2009 at 6:21 pm
I prolly agree with anything you have to say about GOP and the banksters. I am not a big fan of them and I wouldn’t miss it if both of them completely disappear from the face of the earth tomorrow morning. Unlike you I put democrats in the same company.
Get your head out of Obama’s ass, you may see it more clearly. That’s all I am sayin’.
September 9th, 2009 at 6:48 pm
I don’t think Obama’s and the democrats proposals or actions are perfect. However, our democracy as constructed does not allow them to do what they want. The fact that they need 60 votes in the Senate (including every “blue dog” so-called democrat) pretty much blocks any serious attempt at doing anything against Wall Street. The GOP have decided that they will rather see the country go to hell than see Obama get a second term – and with all the yelling against Obama and democrats rather than where it belongs (the party of NO), their plan seems to be working out.
I will probably disagree with Obama on health care after tonight. Without a public option the reform is simply forcing poor people and businesses to hand over more of their money to private health insurance companies so their CEO’s can get $60 million bonuses instead of $40 million bonuses. So I support those house democrats that say reform without a public option is worse than nothing. Let it fail and then push forward a proposal that allow any and all businesses and individuals to purchase the same coverage that congress gets, for its actual cost. And then add an extra 3% employer and 3% employee contribution on medicare/medicaid tax on individuals and employers that do not provide/have health insurance. That could give those individuals and their children basic medicare insurance (adjusting deductibles to ensure that it is cost neutral).
September 9th, 2009 at 6:52 pm
DeDude
Although I’m a registered Independent….I voted for the SOB.
The fact is that since O has taken office none of the root issues of our economic problems have been addressed. Not one.
Nobody gives a goodgoddamn about healthcare if they don’t have a job/money to put food on their table.
Nothing has been done to rein in the Banksters.
So now if we call him on it we are “shills”??
WTF??
What’s next?
COMPETENCE. That is all I’ve ever ask of in my elected leaders.
WTF IS THE COMPETENCE??
Shill this you asshole.
September 9th, 2009 at 7:01 pm
Tactical Error? More like tactical terror. Its in part with psychological warfare. They are playing that game. The American tax payer does not know how to play.
Switch to health care in middle of a financial crisis? Look over there while I take this money out of your purse. What money? I did not take any money. Look I give it back. Recession is over. Be happy. Buy the rally. Nothing was stolen are you sure your health care coverage is okay?
September 9th, 2009 at 7:43 pm
DeDude,
There’s no debating you. You only provide excuses for the people you like and demonize those you don’t like.
Public option is as good as the finances of that country. Newsflash to you, this country is broke and you want to add on trillions of debt on top of it. If it was wrong for Bush to spend a trillion on a unnecessary war, it is equally wrong for Obama to spend a trillions on his spending binge. I know you will tell me how many people will be served by this public option and how much money we will save in the long run and blah blah blah. Why should I trust any of these claims when the claims made in passing the stimulus has turned out to be so RIGHT?
What makes Obama and his cronies so smart? The evidence is quite the contrary. That’s all I am saying…
September 9th, 2009 at 9:54 pm
Great Post and on the mark. Instead of taking care of what’s wrong with the financial industry the “fools rush in”
and try to force a win with health care not realizing that no deal is better than a bad deal.
After seeing Obama tonight I’m not encouraged, he said he’s going to legalize corporate taxtion of Americans
(Barry will have to right a book in 30 years), it starts with mandatory insurance and then every industry
will line up to make Americans responsible by mandating they buy their product (and since it’s mandated they don’t have to return anything in real value, so much for a market economy). My guess is that the financial industry will be next in line for government mandates via 401k”s.
The Democrats are following the same path as the Republicans who lost the elections. I know next time I’m voting third party.
September 9th, 2009 at 10:31 pm
“I believe the brain trust behind the Obama White House has made a huge tactical error.”
I believe the brain trust behind the Obama White House has made a calculated tactical move that was integral part of the plan.
Summers and Geithner decided right off the bat that nothing untoward would happen to their Wall Street friends. Let’s not forget that Geithner was on the short list of candidates for CEO of Citigroup, that he intervened personally to make sure the ICE would be the de facto derivatives exchange, etc. etc.
September 9th, 2009 at 10:46 pm
[...] The Rest of: Barry Ritholtz’s Post [...]
September 9th, 2009 at 10:53 pm
FT,
I agree and I am convinced that it’s a diversion devised by the wallstreet gang.
Divide the populace with their usual left vs. right, and both will forget and forgive the wallstreet.
Damn, they might be succeeding…..
September 9th, 2009 at 10:55 pm
as examples, not to be construed as an exhaustive listing, some see the Game being played: “Tactical Error? More like tactical terror. Its in part with psychological warfare. They are playing that game. The American tax payer does not know how to play.
Switch to health care in middle of a financial crisis? Look over there while I take this money out of your purse. What money? I did not take any money. Look I give it back. Recession is over. Be happy. Buy the rally. Nothing was stolen are you sure your health care coverage is okay?”
and,
““I believe the brain trust behind the Obama White House has made a huge tactical error.”
I believe the brain trust behind the Obama White House has made a calculated tactical move that was integral part of the plan.
Summers and Geithner decided right off the bat that nothing untoward would happen to their Wall Street friends. Let’s not forget that Geithner was on the short list of candidates for CEO of Citigroup, that he intervened personally to make sure the ICE would be the de facto derivatives exchange, etc. etc.”
others, remaining DeLusional, choose, willingly, to be played..
~~
“America is a Republic, a constitutional Republic of a democratic (one man – one vote) nature. However, we are not a democracy where the majority rules. That is government propaganda designed to condition you to accept their injustice and believe that there is nothing that you can do about it.”
http://www.tax-freedom.com/ta19007.htm
September 10th, 2009 at 12:19 am
[...] Tactical Error: Health Care vs Finance Regulatory Reform [...]
September 10th, 2009 at 2:44 am
[...] Tactical Error: Health Care vs Finance Regulatory Reform Barry Ritholtz [...]
September 10th, 2009 at 7:08 am
[...] Tactical Error: Health Care vs. Finance Regulatory Reform – the big picture [...]
September 10th, 2009 at 7:40 am
jeg3 Says: at 9:54 pm – “he’s going to legalize corporate taxtion of Americans … it starts with mandatory insurance and then every industry will line up”
interesting way to put it .. thats capitalism for ya / reinforced with property taxes
no where to go / play the central bank game or go to jail
I am in the worried camp .. that forced health insurance coverage would make me a criminal .. instead of the lucky dog I am (so far) .. this insurance debacle / debate got me looking (job change) into possibilities to cover my butt ..
with my pre-existing conditions – health care insurance seems like throwing money away / the disallowments by insurance .. so thinking of going accident only insurance (seems affordable)(1 outta 3 companies returned with a proposal)
the 3 things holding me back at this moment in time:
1. these oncoming laws changing the policy and maybe the cost
2. will they actually pay up when the time comes (seems everybody is playing “sue us if ya want it” game)
3. above #2 (why not me too) its how we play the game these days .. ie bankruptcy in this case
The accident policy that was somewhat acceptable – ya know what – a hernia is not an accident .. makes you wonder what else in the long list of things that go wrong with the body as you age is a disallowed expense.
So to keep me out of jail or from pushing an EDAR around in some warm climate .. I would like a government assurance and premiums I can afford in this all messed up world .. which I am fortunate – because early on was conditioned into not create’g children to be exploited by the world.
September 10th, 2009 at 7:53 am
ps to regulators – this accident insuance policy .. since I’m not accident prone .. do I get my 20%+ (80-20 $1K deductable) back if their staff lawyers get other party (fault was other car) to pay up some years down the road?
September 10th, 2009 at 9:58 am
my business, building, van, cycle are insured .. I’m trying … I know / the system needs more .. I understand .. this post is so youall know / understand …. I see the GOP pov . pay to play (pay to live) .. if you can’t play / your on your own .. cause its a jungle out there
September 10th, 2009 at 10:02 am
Christopher; the shills are those who refuse to acknowledge that there are differences between GOPsters and Democrats. That is one of the myths that Wall Street is trying to disperse. Because with no difference, then you may as well vote for the party that won’t raise your taxes (wink, wink). And with the GOPsters in charge you get bancrypcy reform that allows the banksters to enslave middle class people who get in over their heads (the rich still have their usual outs). You may remember that without the democrats holding out, even people with below median income would have been trapped as bankster slaves if they had a medical or jobloss emergency that forced them into bancrupcy.
I have no problem with people pointing out problems with the Obama and the democrats, as long as they recognize that in our current democracy you need every single blue dog democrat independent and one GOPster in the senate to pass a new law. Any spoiled little brad stamping his feet and demanding that they do this or that, has to explain how they get to 60 senators, before he/she can be taken serious. All that BS about competence and action needs a specific outline of how you get around a GOP senator group who is united in their one and only goal of sinking the country so Obama wont get a second term.
Anybody who looks at bancrupcy reform and consumer protecition against credit card traps (and other abuse by banksters) can see that there is a difference between the two parties. If people are still saying that there is no difference, then they are simply shilling for those banksters on Wall Street.
September 10th, 2009 at 10:03 am
madman130;
Newsflash 1; this country has been broke since Reagan’s second term and has somewhat managed to continue anyway.
Newsflash 2; there is a heck of a lot of difference between wasting over a trillion on a unnecessary war and spending less than 100 billion per year on giving this country a modern health care system. We are talking about less than 20% of our absurdly overblown military budget.
Newflash 3; the stimulus has stopped the free fall and stabilized housing and car industry. It also has prevented the current great ressesion from following the disasterous path into depression that it was headed for. I know you don’t believe your own lying eyes, and it would somehow magically have occurred anyway without intervention. Classic neocon; never let facts get in the way of ideology and preconcieved conclusions.
Newsflash 4; the thing that makes Obama and his team smarter is that they build their actions on facts and historical experience, rather than just pulling them out of some ideologically distorted dumb a$$. So they have a much better chance of getting it right, than the previous neocon administration.
September 10th, 2009 at 10:39 am
I’m afraid I’m inclined to agree with Mark E Hoffer.
It’s one of the older stories out there, follow the money if you want to know who’s really making the decisions.
The uninterrupted continuity of how the financial industry has been treated by first the Bush Admin and then the Obama one to me makes it perfectly clear that the whole two party system is a sham when it comes to dealing with Wall Street.
Republican vs Democrat is puppet theater to distract the masses. Choose what’s in my right hand and I’ll give Wall Street whatever they want… or choose what’s in my left hand and I’ll give Wall Street whatever they want… hurry, and choose, it’s the most important choice we’ll ever let you make.
As long as the can keep the left and the right arguing among themselves the Kleptocracy can continue to funnel money from the masses into their own pockets (be they politician or bankster). Simple divide and conquer, and it’s still working like a charm.
I don’t think Obama has missed the opportunity to reign in Wall Street, I don’t think he (or McCain, or any other politician out there) has any intention of doing anything of the kind. Washington and Wall Street are the co-dependent parasites feeding off the populace, expecting one to discipline the other is as wishful thinking as the laughable “Wall Street will regulate itself nonsense we’ve been fed”.
September 10th, 2009 at 5:44 pm
[...] via Tactical Error: Health Care vs Finance Regulatory Reform | The Big Picture. [...]
September 11th, 2009 at 9:04 am
[...] our recent discussion of the Obama White House tactical errors, and the anniversary of 9/11, I thought this was as good a time as any to share Doug’s [...]
September 11th, 2009 at 2:35 pm
[...] Barry Ritholtz has an interesting post suggesting that the Democrats made a significant tactical error in pursuing health care reform before pursuing financial regulatory reform:There was widespread popular support for a full reform of finance. What the White House should have pursued was: 1) Reinstatement of Glass Steagall; 2) Repeal the Commodity Futures Modernization Act; 3) Overturning SEC Bear Stearn exemption allowing 5 biggest firms to leverage up far beyond 12 to one; 4) Regulating the non bank sub-prime lenders; 5) Continuing high risk trades to be compensated regardless of profitibility; 6) Mandating (and enforcing) lending standards, etc. All of this could have been accomplished in the first 6 months of the Obama administration. The consumer protection stuff could have been tossed in as well, though it was not the cause of the collapse. [...]
September 12th, 2009 at 5:57 pm
If we didn’t have phoney mortages aided, abetted, and promoted by regulators, would we be in the same financial crisis? If not, then the to use the crisis as an excuse to usher in a bunch of pet reforms is bogus. If these reforms, which I admitedly do not understand, will make markets more open and efficient, then I am for them. If they are simply going to empower a new army of morons to man the maginot line to fight the last war, then been there, etc….
Differences between parties? Well, maybe not a lot if you want you really want is revolution of the proletariat, as some here seem to seek, but some difference…. if there is a difference between Scalia and Ginsberg that is. Those who say there is no difference between the parties live in a parellel universe and should be handled with kid gloves.
Although my income is surely low in the audience represented here, I simply have no capacity, or gene, or whatever it takes to resent or envy or criticize the money that other people legally make. Until they make it by taking it from me under the threat of force…. can we think of any examples of this? Oh yeah, I don’t have to worry because I don’t make 250 grand. Forgot.
September 27th, 2009 at 5:25 am
[...] Barry Ritholtz writes: I believe the brain trust behind the Obama White House has made a huge tactical error. [...]
October 19th, 2009 at 7:12 am
[...] Tactical Error: Health Care vs Finance Regulatory Reform (September 9th, 2009) [...]